Question

1 1.1.9 Quiz: How the Economy Affects Business and Marketing Question 2 of 10 During a depression or recession, which of the following is most likely to happen to interest rates? A Interest rates will likely decrease as the Federal Reserve Board increases inflation rates. B. Interest rates will likely rise as the Federal Reserve board decreases inflation rates, C. The Federal Reserve Board will likely raise interest rates D. The Federal Reserve Board will likely lower interest rates​

Answer 1

During a depression or recession, the Federal Reserve Board will likely lower interest rates.

What is a recession?

A recession is a period of general slowdown in an economy. When there is a recession, the GDP for four consecutive quarters in negative.

How does the Federal Reserve react in a recession?

The Federal Reserve would want to simulate the economy and increase the production levels in the economy. One of the ways to achieve this is to lower interest rates. This would encourage borrowing and increase the money supply.

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